Mercatus: Georgia ranks 28th in state fiscal condition

“State fiscal condition is multifaceted and difficult to measure,” wrote Dr. Sarah Arnett, a graduate of Georgia State University and analyst at the Government Accountability Office (GAO). “Using a method developed in previous research, I create the cash, budget, long-run, and service-level solvency indices using
fiscal year 2012 data to measure the dimensions of fiscal condition.”
Georgia ranks 30th in cash solvency, 36th in budget solvency, 32nd in long-run solvency, according to the paper. The state ranks 8th in service-level solvency, which is measured using taxes and revenue per capita, along with expenditures per capita.

In terms of overall fiscal condition, which is determined by the four other solvency measures, Georgia ranks 28th. Here’s the full ranking of states:

“The five states with the highest-ranked overall fiscal condition are Alaska, South Dakota, North Dakota, Nebraska, and Wyoming,” wrote Arnett. “The five states with the lowest-ranked fiscal condition are New Jersey, Connecticut, Illinois, Massachusetts, and California.”

“The top five states all had a surplus in fiscal year 2012 as measured by an increase in net assets, but there are differences in their underlying strengths. I find that the states with the worst fiscal condition have had years of poor financial management across the different dimensions of fiscal condition,” she added.

Correction: The Mercatus Center is based at George Mason University, not George Washington University, as an earlier version of the post stated.

8 comments

Big surprise! The Mercatus Center which is funded by Koch money finds progressive states insolvent, and the reddest states (which by the way have oil money…or very few people or both) to be the most solvent. The question should be how a rigged study put GA so low…lol

A diversity of measuring variables makes it wise to look at different approaches – recall it was Moody’s trained by Goldman Sachs that rated bundles of mortgages as AAA so they could sell them to institutions restricted to AAA….then CDO oops !

So why is GA AAA with Moody’s and yet 28 on this list ? Once that is answered we are closer to a buy or sell decision.

Hi Harry, and thanks for the note. I asked Dr. Arnett about it, and she pointed to the part of the paper which looks at why S&P’s rankings may differ from her own. The answer for Moody’s would probably be similar–they’re measuring different things.

Her goal with this study was to present a new methodology, and she acknowledges that other approaches have their merits as well.